Thursday, May 31, 2012

Bankers are in a LOT of trouble. They once considered themselves pillars of the community in charge of the community's well-being. Now they are seen as vandals who devote their considerable skills into dreaming up new forms of theft. They are so far into debt themselves that they all are now essentially wards of the state and the state's citizens want seriously bad things to happen to them. And now they are in danger of losing pop culture. Since their basis of wealth and power is an illusion, pop culture is a threat because it also traffics in illusion. The difference is a guy like Bruce Springsteen can make people happily repeat his words because they can sing them. Banksters do not have such power.

Charles Ferguson made a small pile of money selling Vermeer, his software company, to Microsoft in 1996 for $133 million. Vermeer's main product was a visual website development tool called Frontpage. I only tried Frontpage a couple of times but I found it slow, clumsy, and poorly developed. But then, I am an Apple guy and tend to dislike Microsoft products so maybe Vermeer was priced right. In any case, Ferguson now had much more money than he could stuff in his wallet. So inevitably he wound up trying to invest his small fortune. Suddenly his software world of cause and effect was gone and he was surrounded by cutthroats. My guess is that he lost a part of his bundle and was furious because he had been cheated. And so he makes a very interesting movie called Inside Job that wins him the Oscar for documentaries in 2010. I thought it was a damn fine effort—you can read my review here.

Apparently, he is still pretty pissed off at the banksters because now he has written a book called Predator Nation. I have not read it but judging from the essay below, you can watch his mind evolve. Ferguson is a Producer who has discovered that the Producer way to get rich in USA is beset by increasing hazards. For everyone like him these days, there seems to be a thousand guys trying to rip him off. But you can see that he has not thought about this problem very deeply because in the first sentence of the article below, he indicates a belief that this phenomenon has only existed since the 1980s. As someone who has been writing about the Predators since the 1980s, I can assure Ferguson that Predation in business only became more brazen and obvious then. But Predators feasting on Producers has been going on since at least the dawn of agriculture. And I am pretty sure he has some ways to go before understanding Producer-Predator class analysis.

Anyway, welcome to the tiny club of Producer theorists Mr. Ferguson. I would recommend you read Veblen's The Theory of the Leisure Class. You are now eminently qualified to understand it. Given your obvious intellectual progress since 1996, you will probably figure out most of this on your own. But as an inventor, don't you wish to avoid re-inventing the wheel? If you read Veblen, you will save yourself a lot of time and effort.

New wind power installations in the first quarter were the highest for that period since 2009, as companies pushed to complete wind projects before potential expiration of the renewable-energy Production Tax Credit at the end of the year, according to the American Wind Energy Association. The U.S. added 1,695 megawatts of wind power capacity in the first three months of 2012, up 52% from 1,118 MW during the same period in 2011, AWEA said. "The last five years have been marked by unprecedented policy stability, and in response wind power has delivered," AWEA CEO Denise Bode said. SNL Interactive (free content) (5/2), RechargeNews.com (tiered subscription model) (5/4), RenewablesBiz.com (5/3)

This is BIG! It is pretty easy to dismiss Krugman as this conservative turned liberal who hectors the neoliberals from his comfortable perch at the New York Times. But this is different. He is in a foreign country suggesting that the Irish essentially blow up the establishment consensus on economics. Don't know if it will work, but you got to admire the man for trying. Somehow, he must believe that the neoliberals who have utterly dominated the economics profession for over a generation have become the "rotten door" that only needs a good push to destroy. Either that, or else his is a very brave man on the verge of becoming a martyr. Mostly, I believe he understands the weakness of the opposition and is positioning himself to lead the way out of the neoliberal madness.

The news of major gains in production capacity in the manufacture of solar cells should be very good news for everyone who wants to see renewables become the dominant form of electrical generation. Unfortunately in this era of economic neoliberalism, the inability of the world's consumers to buy all the solar cells that can now be produced cheaply is leading to a nasty trade conflicts and the destruction in the ability to make something the world obviously needs. So once again we see the greed-induced global debt crises doing serious damage the real economy—this time to an industry of the future.

I have recently been witness to a Leisure Class outrage of epic proportions. The local professional football team was furious that they hadn't gotten a new stadium since 1982. So in a state that has scrimped by on maintenance for so long we actually had a bridge fall into the Mississippi, various government bodies have been blackmailed into building them a $Billion edifice that will be used, at most, a couple dozen times a year. Not even cathedrals are that useless.

The economics of these pleasure palaces are insane. Stadium supporters trot all the amazing amount of jobs (part-time peanut vendors) and other benefits that will follow from such an "investment." But because the real numbers never add up, the benefits are wildly inflated by intangibles including rising property values for adjacent land, or the number of Minnesota mentions on national TV, etc. The big mother talking point is, "Without professional football, we are simply not a big-league city!" An amazing number of (mostly) men buy this argument. Some primitive instinct kicks in that says "We exist and want to be recognized." Since sport is one of the acceptable occupations of the Predator Classes, this desire for recognition simply MUST be accompanied by a spectacular display of conspicuous waste (or Veblen would be wrong.) And while Dallas will still have a bigger stadium / dick, $Billion will buy an astonishing amount of wretched excess.

For me, the idea of building that football team a new stadium utterly infuriated me mostly because I HATE the sports scene in this neck of the woods. The University of Minnesota's Gophers are terrible at everything and have been for over half a century. The only exception was when they accidentally hired Herb Brooks (USA's Tarisov) to coach hockey—a "mistake" the school refuses to ever make again. The pro teams suck so badly, they could replace gravity.

But I reserve special contempt for the Vikings. This is because not only is the team an exercise in utter futility—they have the freaking nerve to name it after MY tribe. I am such a pureblood Viking (7/8 Swede, 1/8 Norwegian) that 1/4 of my ancestors come from Gotland! When we wanted to be, we could be REALLY ferocious. Most of Europe's churches at one time included some version of the prayer "From the fury of the Northmen, deliver us O Lord." At the height of the Viking age, we controlled a trading area that stretched from Canada to Constantinople. In the process of saving Northern Europe for the Protestants in the Thirty Years War, we Swedes messed up Germany so badly, it required over 150 years to recover. We are horny enough to have collected most of the seriously beautiful women in Europe and brought them home for about 500 years—a move that makes it almost impossible to walk the streets of Stockholm to this day without seeing at least a 9.5 on a regular basis. And when our tribe settled down, we built countries that lead the world in every possibly important social indicator from infant care and childhood education to old age care. Our societies have 98+% literacy rates and we actually use that skill to read books!

How the hell does a collection of bad memories playing a game imagine they can name themselves after US? It's not flattering, it's embarrassing and trust me on this, real Vikings HATE to be embarrassed! When they started blackmailing the state into building a $Billion edifice to their rank incompetence, I wanted to demonstrate some of that old "fury of the Northmen." Mostly, I just wanted that team to leave town—which is what they threatened to do.

As far as I am concerned, the football team can go to LA, only unlike the Lakers, you do NOT get to take your name along. For if you do, we will solicit money from every person with a Scandinavian surname in the 5-state area and use it to hire the most tenacious legal assholes we can find to tie your franchise in legal knots. We will also hire a good PR team to shame you bastards in ways the Native Americans only wish they could do to the Washington Redskins.

Because WE are Vikings and the football team is NOT! Not. Even. Close!

Tuesday, May 29, 2012

Recently fired German Environmental minister Norbert Röttgen has been mentioned in 13 different posts here at real economics—the latest last Sunday. He is obviously a favorite of mine. So when I had an opportunity to speak with a real live member of that ministry Monday morning, my first question was "Why did Angela Merkel fire Norbert Röttgen?"

Röttgen not only lost his election in North Rhine-Westphalia, he didn't seem too interested in winning. Apparently, he likes Berlin more than Dusseldorf. He was accused of arrogance (which I always thought was the default posture of bright German males but how he differed from that norm was not explained.) There were other examples concerning his lack of consensus-building skills but they all added up to the simple fact that the skill sets that made him an excellent environment minister did not make him a good provincial politician. Ms. Merkel wanted a loyal regional politician at the head of Germany's most populous state and Norbert Röttgen blew it big time—she almost HAD to sack him.

I asked if the problem could have been that Röttgen was too progressive for such a conservative government. I was assured that this was NOT a policy debate and that I was probably going to like his successor just as much. We will see (13 posts!). When I suggested that it was VERY important for the Germans to get it right on the environment because they set the global agenda, I was told that within Germany, there is a feeling of environmental stagnation and that leadership on environmental matters could be passing to China.

Monday, May 28, 2012

Reader someofparts sent me this link in response to a post containing a video of Paul Krugman claiming that Mitt Romney's career at Bain Capital is fair game for criticism. It addresses the question I have been struggling with for most of my adult life, "Why did the Democratic Party abandon its economic roots and become a party of cultural identity?"

Understand, some of the cultural issues that have so consumed the Democratic Party since 1973 have been perfectly valid. I am NOT saying that gays shouldn't be supported in their struggle to live a normal life or that women shouldn't have legal guarantees for reproductive choice. But whether unintended or not, these issues have crowded out the economic issues that affect everyone. Gay adoption affects 3% of the population at most. The current economic calamity affects (as #OWS reminds us) 99%.

For those who believe the move of the "left" from street battles over pay and working conditions to conferences on political correctness was anything but an accident, here is a thumbnail of how it looked to me as it happened.

I graduated from high school in 1967. I had been very sheltered from the outside world—no television until I was a sophomore, no movies before I was a senior, and no pop culture on the radio (although I had built a five-tube radio in seventh grade that pulled in all the clear-channel stations between the Rockies and the Appalachians from dusk until dawn so that prohibition wasn't air-tight.) So when I got to University of Minnesota in the Fall of 1967, everyone was more clued-in than I was. As a result, my university days were an ongoing low-grade cultural anthropology investigation. Because, even though I had been sheltered from the currents of big USA pop culture, I HAD been given an alternative culture that was interesting and complex from which to form a basis of comparison.

For example, even though my father was a real Bible-thumper when it came to the theological tenants of the Lutheran Church in North America, he was also an thorough-going FDR Democrat. He was such a believer in cooperatives that he would say "Jesus was the first cooperator" given the appropriate provocation. Most of this was pragmatic. Small-town preachers in those days were also small-scale social-welfare agencies. After all, someone had to look after the interests of the widows and orphans and so my dad drove them to doctor's appointments etc. We had a steady stream of the orphans over to eat and to spend other occasions like Christmas. But we were barely making it ourselves—small-town preachers are NOT overpaid! So no matter our family's commitment to the unfortunate, we could not support them. So my father was a New Deal Democrat because of AFDC (Aid to Families with Dependent Children) as much as anything. I am glad he died before he could see Bill Clinton end the program in 1996—because that treachery would have killed him anyway.

If this experience had not been unique or impressive enough, my father in a fit of ecumenicism sent us kids to a Mennonite-run Christian Day School in town. Try to imagine growing up during the insane militarism of the Cold War while being educated by people who had been pacifists since 1534. I lived on a street with a church formed by Mennonite young men who went off to World War II and were NOT welcomed back to their home churches when it was over. Mennonites believed you put your energy into assisting the victims of war so my neighborhood housed several displaced persons—including two amazingly damaged German women who had survived multiple rapes when the Red Army came through on their way to Berlin. One of them had a daughter by that rape who would occasionally wake the neighborhood with her nightmare-induced screams.

So I may have been a hick who had never heard of Elvis, but I went to college "knowing" three things—the Democratic Party existed to better the economic circumstances of the poor, war was a terrible, hideous, unbelievably ghastly thing that all moral and sane people opposed, and that the only completely honest occupation was farming—for farmers, honestly isn't a moral option but rather a survival mechanism. Imagine my surprise to discover Cold War "liberal" professors who took money to help design the Phoenix Program or taught that farmers were the bad guys. But nothing shocked me as much as discovering as early as 1970 that "my" Democratic Farmer Labor Party was in the process of abandoning its commitment to economic justice in favor of cultural issues. This one snuck up on me because stopping the war in Vietnam seemed more important than Medicare or the minimum wage. But I thought that we would first stop the war and THEN go back to economics. Well if Bain Capital-defending Cory Booker is any indication, the Democratic Party still has no intention of going back to defending the economic interests of the HUGE majority of the citizens of the country. Our party got lost on THE big issue and even though the country is desperately hoping we can find our way again, being lost seems now to be the default position.

The question is, HOW could this happen? How did the so-called American left just walk away from victories that had cost so much time and blood?

Explanation #1. The Theory of the Leisure Class. One of the most universal human phenomena is the cultural degeneracy that comes with becoming rich. Suddenly, work itself becomes disreputable. This does not usually happen to the person who actually does something useful to get rich—but it almost always happens to his children. Anyone who reads the story of the Ford fortune is struck by the amazing gulf between Henry, who glorified practical work as he perfected transportation for his practical farmer customers, and Edsel his son who was thoroughly embarrassed by his dad's cars and wanted to build something more stylish for his friends from college. Henry finally bought Lincoln so Edsel wouldn't have to mumble when his useless friends asked him what he did. One of the things that happened to USA society post WW II was that blue-collar workers could send their children to college where they learned the arts of snobbery. USA became a nation of kids who were rich by ANY historical definition of the term—except for having servants. They might not have been able to command a team of strong men to carry them around in sedan chairs, but a Boss 302 Mustang was a FAR more interesting alternative in any case. And the guy who installed air conditioners could afford one. Everyone got rich so everyone started acting like the most ridiculous examples in Veblen's classic. The culture had "industrialized" status emulation.

Explanation #2. The Frankfurt School. Economic Marxism barely made a dent in the USA Zeitgeist for a wide assortment of reasons. But one of the lessons the Marxists learned in the failed revolutions (Germany, Hungary, etc) that followed the successful one in Russia (1917) was that even though they claimed to represent the interests of worker and peasants, most of the workers and peasants wanted nothing to do with them. So in 1923 a group of banker's-kid Marxists, who formed a particularly noxious Leisure Class subset of the movement, founded the Institute of Social Research (later known as the Frankfurt School) which wanted to solve the "problem" of worker disinterest in Marxist teaching. They had come to the conclusion that religion and other cultural artifacts prevented worker enlightenment so needed to be destroyed. One of its founders, George Lukacs, stated its purpose as answering the question, “Who shall save us from Western Civilisation?” The Frankfurt School gained influence in American universities after many of it founders fled the Nazis in the 1930s. I am pretty certain that no Frankfurt School refugees made it to the University of Minnesota but I still felt their influence. I got to know about Marcuse because he was a self-appointed advisor to the anti-Vietnam War movement and I was assigned to read Charles Reich's The Greening of America for a political science class. Ideas are important, so even though it is relatively easy to dismiss the Frankfurt School refugees as an unimportant fringe element, they certainly DID influence the cultural debate. Their most important idea was called Critical Theory which contained the main elements of "political correctness" including “authority theory,” “matriarchal theory,” “androgyny theory,” “personality theory,” “family theory,” “sexuality theory,” “racial theory,” “legal theory,” and “literary theory.” The influence of these can now be seen all over the place. I once had a neighbor who believed in androgyny theory so completely that she told me that if women were given equal training and opportunity, they could do any job a man did—INCLUDING playing middle linebacker in professional football (I asked). So even people who never heard of the Frankfurt School probably wound up believing some of their ideas.

Explanation #3. The "hard hat riot." On May 8, 1970, 200 construction workers under the direction of the AFL-CIO beat up on a bunch of kids protesting the Vietnam War / Kent State / Invasion of Cambodia. I remember being personally horrified by this turn of events. As someone who had earned much of the money necessary for college by working construction, I could easily see both sides of this conflict and I knew it would get VERY ugly. And it did. By the time I left UM in 1974, I must have heard "construction workers" used as a synonym for ignorant fools a hundred times and by 1980, blue-collar Producing Class Democrats put Ronald Reagan into the White House.

Explanation #4. The Arab Oil embargo. Cheap oil powered the Producing Class prosperity of post-war USA and in 1973, that lovely era came to an abrupt end when OPEC stopped shipping oil to the West. All the prosperity that came from having hundreds of mechanical slaves and horses just lost its main reason for existence. Check any chart out there and you will see that general living standards stopped rising that autumn. And when the cheap oil ended, so did a lot of other things including the influence of the counter-culture. Music, that had become so socially aware that a TV rock band called the Monkees sang about status emulation (Another Pleasant Valley Sunday), began its long slide into cultural irrelevance. Soon, we were supposed to like disco.

I wrote about the actual events of the great decline that happened after the Democrats quit defending the Producing Classes. You can find it here.

The problem with most ideologies is that at some point, reality intrudes and either the ideology must change or the ideologists must somehow suppress the evidence that the facts on the ground do not support them any longer. When the subject is climate change, the facts just keep piling up and so those who claim otherwise are forced to become ever more shrill and absurd. In today's example, an organization called Heartland Institute put up a billboard comparing those who accept the science of climate change to the Unibomber only to discover that the number of rich denial nutjobs is finite and even they aren't nutty enough to want to be associated with public moves like that.

Unfortunately, because sowing doubt is SO much easier than building a program for meaningful action, the collapse of the Heartland Institute won't get a sustainable society built. Making fun of fools is easy—building something better is very hard!

Nothing, but nothing, proves that the folks who are currently calling the economic shots are bug-eyed, batshit insane like the current unemployment among the world's young people. Even the Leisure Classes believe young people should work! And if the ILO is correct, the situation is about to get worse.

Friday, May 25, 2012

A sad refrain I hear myself and others repeating more often the past few years is "we're becoming a third world country." The latest evidence of this sad but not inevitable trend is that the U.S. Coast Guard has now placed U.S.-flagged vessels on the Coast Guard's "gray list" for increased scrutiny in port because of "an alarming trend in the number of significant deficiencies noted," according to an article in MarineLog.

In an article published on the Coast Guard's homeport website, Capt
Christensen says these deficiencies mainly relate to improper manning,
primary lifesaving equipment, engine room fire hazards, structural hull
safety, and the inability to verify compliance with international
conventions due to missing or non-endorsed documentation such as
International Safety Management (ISM) certificates.

This pattern, writes Captain Christensen, is illustrative of a
decline of registry performance, which has firmly landed the U.S. on the
"gray list" in at least one of the regional PSC regimes since 2008.
This status is indicative of an average performance over the preceding
three years and signifies the necessity to implement immediate
corrective action. As a result of "gray list" categorization,
U.S.-flagged vessels are subject to increased PSC scrutiny and
examination frequency. Compounded with the results from Coast Guard and
class oversight efforts, multiple substandard conditions have been
identified and attributed to habitual offenders indicative of a flawed
safety management culture.

One company had its ISM Document of Compliance revoked because of a "clearly established a pattern of
habitual disregard for rules and regulations" Shades of Wall Street!

This story struck me, because back in the 1980s, I wrote a number of articles about the merchant marine and shipbuilding. South Korea in particular was being very aggressive in its support of its shipbuilding industry as an industrial policy to direct the development of their country. Which succeeded, brilliantly, no thanks to all the "free market" naysayers. Anyway, at the time, it was generally recognized that U.S.-flagged vessels were among the most ship-shape in the world. Reflagging vessels in Panama or Liberia or some other country without the means to actually regulate a maritime fleet had become a sad joke, with many foreign flagged vessels in deplorable, even dangerous, condition. Many such vessels were prohibited from entering or off-loading in U.S. ports. Now, it seems, the U.S. has caught up with the rest of the world. Onward the (in)glorious march of pecuniary culture!

I've been meaning to watch the Girlfriend Experience for some time because it is Soderbergh being experimental. It was mostly shot hand-held with a Red One camera (although by the time Netflix has gotten through stepping on it, it's hard to tell even though it is supposed to be running HD.) These seem to be real people confronting real-life dilemmas.

What makes this story especially interesting is that is was shot just before the 2008 election in New York City. The economy is crashing and everyone is scrambling to keep it together. It's a portrait of the anthill where everyone is trying to make whatever scam they have invented pay off—as seen through the eyes of an expensive call girl whose hook is to pretend she is as interested in these guy's lives as she would be if she were their girlfriend. These are men with mostly Predator-class jobs in lower Manhattan and their money pile is drying up.

On occasion, we get to hear their political / economic views and they are not especially different from the conventional "wisdom" of Wall Street. The pressure to conform intellectually must be incredible because even though some of them have lost 90% of their incomes, they still cling to the received wisdom of the modern robber barons. Because of this dialogue, this movie is really time-capsule material.

But it dawned on me that technology had rearranged this anthill too. Part of the reason the .01% wind up with all the goodies is that armed with sufficient computing power, the truly rich don't need a lot of hangers-ons to scoop up a lot of loot. So all the second and third tier actors can want are the crumbs that fall from the rich man's table—with the occasional chance they might displace the rich man. So they believe they must parrot fat cat wisdom while waiting for that glorious day when the main chance arrives.

Trust me—this is NOT the mindset of the person who can figure out how to bore a railroad tunnel through a mountain made of rock. Someone that scientifically organized cannot comprehend the anthill in Girlfriend Experience any more than they can understand why folks competed for the honor of emptying the chamber pots of Louis XVI.

Henry Ford was the first BIG industrialist who understood AND put into place a high-wage strategy. Over the past 35 years, we seem to have forgotten one of industrialization's most important principles. And when Nick Hanauer restated Ford's basic truths, his lecture was first banned by the TED people from appearing on YouTube. So here it is—see if you don't agree that this is first-rate Fordism.

Here is the much-talked-about TED talk on inequality given by Nick Hanauer. For more background on this, see this blog post from TED Curator Chris Anderson: http://tedchris.posterous.com

Now that wind turbines photovoltaic cells are reaching technological maturity, the problems posed by storage and transmission are becomes much more obvious. Because the Norwegians have so much developed water power, they believe they can become a storage facility for green energy by making some of their water sites "reversible." Norway has a lot of loose energy capital looking for a home so this might be one of the places for it. It's an interesting project but like all mega-projects, there are a LOT of kinks to work out.

Thursday, May 24, 2012

For your Thursday afternoon entertainment, here is a very clever video where someone has intercut some of the claims for Mitt Romney's Bain Capital with some favorite scenes from gangster movies. Ah yes, the "huge" difference between lower and upper class Predators.

I have occasional issues with Paul Krugman but as you easily glean from the following interview, he is light-years ahead of the conventional wisdom in Germany. But at least they are giving Krugman a serious forum. They MUST be worried about a Greek default.

The situation in Greece grows worse by the day. And in the middle of this catastrophe, they are supposed to select a government. Unfortunately, electing someone new with no viable options isn't going to solve much. What's more, the Greeks know it. So here we have stories about the newcomer who looks set to get the chance to form a new government. His precarious situation is shown by the fact that his assessment of the problems he faces is actually pretty good but his proposed "solutions?"—not so much. The ONE thing he has going for him is that saner heads KNOW that a Greek exit from the Euro will trigger an economic catastrophe.

Wednesday, May 23, 2012

It's a little weird, I know, but I may have a favorite element—tungsten. This conclusion is based solely on my willingness to pay extra for products that contain tungsten like saw blades and router bits. So it was with a great deal of amusement I have been following the story of how allegedly, some gold bars on the market are not really gold, but tungsten that has been gold-plated. (gasp! horror!) As I have lived my life, I have shown that I am MUCH more interested in tungsten than gold. So my main reaction is "and why would that be a problem?"

It is here that we encounter a wonderful example of Veblen's Theory of the Leisure Class. The number of useful applications for gold is quite small. Gold is mainly used for adornment and as a "store" of value, so its ceremonial uselessness is beyond reproach. By the rules of conspicuous waste, gold is an element of unsurpassed status. On the other hand, tungsten's usefulness is arguably second only to iron (steel). Therefore its status rivals that of dung.

Thanks to belligerence in our international relationships, we may soon discover just HOW important tungsten is because China mines most of it and she has begun to tinker with export controls.

This is a partial transcript of a new show where Julian Assange interviews people who have been on the receiving end of official USA propaganda. President Raphael Correa of Ecuador is certainly on the same enemies list as Chavez and Morales. His "crimes" against the USA establishment include closing a US military base in Manta and his outspoken praise for the occasionally progressive economist, Joseph Stiglitz. "When Correa took office, five out of seven privately-owned TV channels in Ecuador were run by bankers." Imagine trying to introduce economic reforms with that sort of opposition.

It is an odd experience to discover that there really are folks who get pissed off about the same subjects I do. So when the left blogosphere, a place mostly known for high political correctness, identity politics, and little else exploded in rage over the comments of Cory Booker on Meet the Press, I was gratified. I have been trying to tell people that the way an economy is organized will determine most of the rest of their life options for nearly a quarter century to mostly blank stares. So the fact that so many people got so angry about an economic issue is a sign to me that maybe we are beginning to take the real economy seriously for the first time in a generation.

So here is Paul Krugman talking about whether it was a good idea to allow the economics of a Bain Capital to ruin so many lives. He isn't a firebrand like you could find on say, Crooks and Liars, but he is making the same points they make. video embed below

Tuesday, May 22, 2012

Here is a man who agrees with me on so many levels, I can only suggest that folks just watch. (HT David Bauer—from Zerohedge)

"Economists today primarily serve the needs of powerful interests at the expense of society in general" is how Robert Johnson - the frighteningly honest Executive Director of INET - describes the self-indoctrinating field of study that remains in such seemingly high regard in the nation. In an excellent and forthright brief interview with Stifterverband, Johnson notes that "Economists are very much accused of 'only seeing the economy through the eyes of the model' as opposed to seeing the economy and building a model as a map of what reality is." And while "when the people become anxious they want the expert to tell them what's going to happen. And they feel good when their anxiety is relieved because they think they understand the future. But if the expert instead of telling the truth is selling snake oil - a false story - when that is unmasked the expert becomes the scapegoat." Overall he believes 'economists' did a great disservice to mankind and suggests a number of approaches to "cleaning up after that". Sadly, he opines, "At the core, economics is about politics and about power, and the question for the economists is whose power are you going to serve as an expert." video embed below

Get a good education. Remember those public service spots that ran forever? Well, it turns out that there is very little link between the number of graduates an economy cranks out and the number of jobs available. Of course, this has not slowed down the education and retraining hoaxes. A company decides to off-shore its production leaving behind a highly traumatized work force that cannot move because no one wants to buy a house in a dying town. Some local politician decides to "do something" so suddenly there are "job centers" where folks are "trained" to write better resumes and be smoother in case they ever get another job interview.

And then there is the fundamental idea of retraining. No more jobs making steel?—why we will just turn all you guys into computer repairmen. (Or whatever) My brother reports that in the wake of the real-estate / construction collapse in central Florida, there are now over 2000 people in the area who have been certified to do wind and energy audits. And while such audits are a good thing, it is highly unlikely the area will need 20,000 such audits in a year—roughly 10 for each new auditor. Each audit pays a maximum of $300 so it doesn't pay to buy the $8-10,000 worth of equipment it requires to do a good audit. All this becomes a crushing disappointment for the folks who spent the time and money becoming certified energy auditors.

But nothing comes close to the scam that is "higher" education. The idea that kids should take on $40,000 a year in debt so they can "learn" the nuances of Chaucer (my "favorite" university time-waster—there WERE others) because the society will be more prosperous with an "educated" workforce is so fraudulent, anyone who advances such a notion should be facing serious jail time.

Before most people had heard of Barack Obama, Cory Booker was being suggested as USA's first black president. He had degrees from Stanford and Yale and had been a Rhodes scholar. This man had made contacts. He was someone who could not imagine stopping his political career at mayor of Newark, New Jersey. People with money had already tagged him as a prospect.

Whether he destroyed his political prospects on Sunday by calling attacks on "Private Equity" firms "nauseating" is still an open question. He has been scrambling for political cover on Monday and has attracted some support. Unfortunately for him, most of this support is tainted by Wall Street so has the effect of dragging him in deeper.

As I see it, he has two kinds of problems.

There is a whole mini-business of selling bonds for and to governments. If you ever want to see a rugby scrum of people dressed in power suits and Gucci loafers, hang around a city hall or state capital when the legislators are putting the finishing touches on a bonding bill. To say that bond salesmen have an incentive to be nice to the politicians would be to indulge in massive understatement. People in finance have probably been VERY nice to him on many occasions over the years.

Then there is the little matter of his Rhodes Scholarship. Folks who don't think about these things just assume that this scholarship is awarded to students who work very hard. But the point of view of the Scholarship people is FAR more focused—they are charged with recruiting potential leaders from the various outposts of the English-speaking world so they can be inculcated with the official English establishment party line. And since Cecil Rhodes, the guy who funded the scholarship, got rich by stealing everything of value in South Africa and shooting the natives who objected, it is not surprising that the Scholarship stresses an education in the various forms of force and fraud. So when it comes to subjects like the legitimacy of "private equity" it is expected that Rhodes Scholars will sing from the correct hymnal—especially those who wish to be future leaders.

The most dangerous Rhodes Scholars, by FAR, are the ones with plebeian backgrounds and sympathies—Democrats who will say all the right things to get elected but when push comes to shove, will jump to the commands of finance capital. Sen Bill Bradley of New Jersey, the man who welcomed Wall Street into the Democratic Party, was a Rhodes Scholar. Bill Clinton, the man who got NAFTA passed and massively deregulated Wall Street including ending Glass-Steagall—Rhodes Scholar. Bob Rae, the Canadian who managed to get elected as Ontario's Prime Minister from the "radical" New Democratic Party and then promptly sold out his labor supporters—Rhodes Scholar. Notice a pattern here?

Monday, May 21, 2012

I have never been inside a meeting such as the G8 Summit but I am pretty sure that they are NOT gatherings of the world's wisest elected leaders who come together to shape policy. Rather, they are meetings that have been carefully planned and scripted so at the end, everyone walks out of the room on the same page. So I think it is pretty safe to assume that whoever cooked up the austerity-for-everyone ideas that have played out in the various parliaments and the House of Representatives over the past two years have decided to throw in the towel and try something else. Call it a well-thought-out policy update or merely bowing to the reality that austerity measures are FAR more troublesome than anything that might gained from their implementation, but it doesn't take a lot of perception to see a big shift.

We all can hope so. We will know things have changed in USA when official opinion starts beating up on Congressman Ryan for his budget proposals.

Sunday, May 20, 2012

Trade policy is arguably THE biggest Producer Class issue of all. Producers argue that it is terribly important that a society makes as many of their tools for survival as is possible. In this scenario, you ONLY import what is absolutely necessary. For a good Producer, "Free" Trade is just a scam to take economic power from the Producers and give it to the merchants. It is an argument the Producers once won easily but have lost completely in the past 35 years.

The "Free" Trade arguments are quite compelling. Take, for example one of my favorite industries—motor vehicles. Under Producer Theory, something this absolutely vital to the economy of the nation should be surrounded by multiple layers of legal protections. When the Asians started to elbow their way into the international automobile market, the Europeans made certain Asian market penetration would be very low while in USA, the "Free" Traders ensured virtually unfettered Asian automobile penetration. It could be argued that the Japanese invasion was the best thing that ever happened to the domestic car makers because they had grown exceedingly sloppy with their production techniques and NEEDED a wake-up call. The cars of the 1970s were TERRIBLE!

But let us assume that the automobile industry is the best-case scenario for the advantages of "Free" Trade. Yes, you can buy something from GM these days that is statistically as well-built as anything from Toyota, but the economic carnage of this philosophy has been incalculable—lost jobs, devastated communities throughout the rustbelt, etc.

And then there are the very real but equally hard to measure costs such as "what is lost when we stop making things and only shop?" or "how much human potential was destroyed when the 'vampire capitalists' like those from Bain Capital swept in and stole everything they could fence and left the rest to rot?" or especially "what kind of economic 'thinking' glorifies such naked vandalism?"

I come from almost pure Viking stock—my ancestors knew a thing or two about pillage. It took us 500 years to evolve into something a bit more civilized and yet all this progress was destroyed in one generation by the ravings of economists who claimed that pillage was just fine so long as it was done in brokerages and law offices.

So now the pendulum has swung back (a BIT) and the arguments are being made that industrial potential is an economic good worth protecting. The fight is being waged over solar panels which is an excellent industry to use to form a more enlightened and Producer-friendly trade policy. I understand the argument for cheap solar panels. But the arguments for a protected domestic industry are also compelling—especially with solar which is going to require ongoing maintenance. Having working panel factories nearby with customer support expertise is going to be an economic good worth having.

This story will be revisited periodically—mostly to see if the rulemakers in Washington understand the real issues involved here.

Saturday, May 19, 2012

Jeopardy! is a favorite show around our house. It comes on when dinner preparations are starting so is an interesting diversion from daily routines. It covers a wide range of subjects. It offers an fascinating peek into the sociology of a country where being smart is no longer a significant factor in getting a good job. It provides me with insights into exactly what my scary-smart partner actually knows. And it keeps me intellectually humble by pointing out those areas I know nothing about—not surprisingly I just kill in categories like history, geography, the Bible and religious history, classical music, science and technology, but am quite hopeless in areas like pop culture, novels, or movie trivia.

The best contests are between folks who have tested their way onto the show (or the contests between major former winners). The absolute worst are the "celebrity" matches where the questions have been dumbed down so that the celebrities won't be hopelessly embarrassed. Normally, I won't even view celebrity contests because they are soooo stupid they are actually painful to watch.

But last week, we got to see a "celebrity" face-off between some of Washington D.C.'s most famous public "intellectuals." Sure enough, the questions had been dumbed down to roughly a sixth-grade level so that everyone could look good and win lots of money for their charities. Unfortunately, the questions had not been dumbed down nearly enough and so we had the spectacle of the New York Times' top pundit and best-selling author, Tom Friedman, fumbling a question on who invented the cotton gin—and other questions equally easy. It explained why the man gets so many insights from his Bangalore taxi drivers—they are obviously MUCH better informed.

So for those who wonder why folks from USA are often ridiculously uninformed, the main reason is that the people being paid the big bucks to inform us are hopelessly ignorant—something that was on full display last week.

Thursday, May 17, 2012

Today’s Lazy Quote Diary is from Peter Temin’s paper, “The Industrialization of New England, 1830-1880,” in Engines of Enterprise: An Economic History of New England, edited by Temin, Harvard University Press, 2000

Temin is one of the few professional economists who has a firm grasp of reality. No doubt this is because he has studied the actual history of how industries and companies are created, nurtured and managed, as will be seen in the following excerpt. But I particularly want to draw your attention to Temin because of what he has written concerning the gold standard, the Great Depression, and our own Second Great Depression. In the 1989 Lionel Robbins Lectures at the London School of Economics, Lessons from the Great Depression, Temin challenged the prevailing monetarist orthodoxy by explaining how the Great Depression was actually caused by the refusal of elites in England, the U.S., and elsewhere, to abandon the gold standard. This blind ideological commitment to preserving a failed monetary system prevented governments from unleashing the liquidity and deficit spending needed to restore aggregate demand generation.

More recently, in a January 2010 paper done under the auspices of the National Bureau of Economic Research, entitled The Great Recession and the Great Depression, Temin argued that public policy today is again crippled by a “gold-standard mentality” among elites, who are unwilling to confront head on the forces of financialization and neo-liberalism that have wrecked aggregate demand generation for the second time in less than a century.

Today we read in The Guardian that Greece's exit from the Euro will cost $1 Trillion. Not explained is why this should possibly matter.

There are two kinds of debt. There's the debt we have incurred with our relationship to the biosphere—pumping the Oglala Aquifer dry, overfishing the oceans, Peak Oil, etc. These debts are real and must be paid in some fashion. The best alternatives involve physical restoration but there are a lot of good ideas out there.

Then there are the debts of the sort that so worry the Bank of England. These debts are quite serious because they lead to the suspension of any projects that would address our indebtedness to the biosphere. But otherwise, they are practically irrelevant. We are talking about electronic money here. If some method of accounting indicates that $1 Trillion has gone missing and it is in everyone's interest that the system continue, it only requires pressing a few reset buttons. Compared to the problem of restoring the ocean's fishing stocks, the debts of banks are NOTHING.

Unfortunately, this obvious fact escapes the sort of people who attend debt-reduction conferences and believe they are acting as adults because they are promising to cut social security benefits. They are quite literally baffled by the bullshit that surrounds the money questions—the bullshit everyone seems to think is necessary so that something as ephemeral as electronic money will be treated with appropriate respect.

Quite honestly, I don't give a rat's ass how they sort out the accounting over the Greek debt SO LONG as the rest of us don't have to pay for it with plummeting living standards AND we get the money to rebuild the real economy. Here's the deal banksters. You go off and push the appropriate buttons so we don't have to listen to you yammer about your phony debts for AT LEAST 20 years, and let us reflate the real economy, and we promise not to bring back crucifixions as punishment for your crimes. Deal?

Wednesday, May 16, 2012

You can move a factory. It's really easy to move a professional with skills. But you cannot move a farm. Land tends to be very well attached to the planet. And because farms cannot be moved, farmers tend to be stuck with whatever governments that can gain control over the land in question. Farmers may be the most vulnerable people on the earth. They also tend to be the most peaceable. So when farmers get angry and organize politically, there has been some serious provocation.

And so it is with Ireland. Their crooked government sold out the citizens to the banksters. Of course, the young with skills have already set sail for anywhere where they think that they can avoid the crushing debts the crooks have left them. But those farmers have been left behind to fight the massive injustices inflicted on them. Hence we see "Farmers for No."

Tuesday, May 15, 2012

LQD signifies "Lazy Quote Diary," in which I present an excerpt or extended quote that pretty mcuh stands on its own without the benefit of added commentary. Most of my LQDs will be in the series "How America Was Built," presenting the actual history of how the United States developed and built itself as an advanced industrial economy. This history completely contradicts the libertarian and conservative versions of American history, as it features an important, even crucial, active and positive role by the federal and state governments.

This post, however, addresses the question of why, rather than how. Hence the screaming caps at the beginning of the title.

This excerpt, pages 160 through 164, from Louis M. Hacker, The Triumph of American Capitalism: The Development of Forces in American History to the End of the Nineteenth Century (New York: Simon and Schuster, 1940), lists the many causes of unrest and discord that led to the American revolt against England. The popular mythology, of course, is that the American Revolution was largely a tax revolt: taxation without representation. In actual fact, the founding fathers and mothers were fighting against the English system of mercantile capitalism, which sought to freeze the American colonies in an economically subservient position as supplier of agrarian raw materials, while ensuring that the British East India Company could monopolize trade between the colonies and the rest of the world. English policy was to stymie, hinder, and outright prohibit, the development of industrial enterprises in America, and the maritime capacity of Americans to trade with the rest of the world. The American Revolution, in short, was a fight to control our own economic destiny, by breaking the English shackles designed to prevent our economic and industrial development.

When I was very young, our family embarked on one of those road trips that became so popular in the 1950s. There were six of us so my father had decided to strap a luggage carrier to the top of the car. Because my father was by far the most technologically graceless person in our whole extended relationship, it wasn't attached properly and about six miles out of town, it flew off and landed in the ditch.

My very religious mother was absolutely convinced that this mishap wasn't so much a sign of my father's ineptness as a sign that God did not want us to take the trip. It required a day to convince her to get back into the car. So today, when I read that France's new president's aircraft was struck by lightning on his way to meet with Frau Merkel, I could only imagine how certain my mother would have been that he was NOT "supposed" to meet with her.

Well, at least I got to read a lot of info on the Dassault Falcon 7x. It may not be Air Force One, but it is a superb biz-jet Dassault will be happy to sell you for $50 million. (This is not a picture of the official presidential airplane.)

It's WAY too early and I have no way to judge how well this sort of technology actually works. The idea of carbon capture seems like a downstream band-aid—you know, first create a big problem and then hope you can mitigate the worst effects. Anyone who has read Elegant Technology knows that my favorite environmental solutions involve redesigning processes so the problems are not created in the first place. But since we are a LONG way from those ideal solutions, who is to say that interim "bridge" technologies like this one aren't a good thing.

What is most interesting about this story (for me) is that this pilot project is being done in Norway. The Norwegians are an historically poor people who lately have found themselves to be seriously rich. They have lived a long time in the shadow of their much more technologically superior neighbors and had to listen to their scorn. And the ugly thing about their new-found wealth is that it involves adding to the carbon in the atmosphere.

This project (if it works) solves a bunch of problems simultaneously. It addresses the carbon dioxide problem (not solves—addresses). It is as technologically sophisticated and leading edge as anything being done by the Swedes or Germans. And it proves the Norwegians can invest their new-found oil riches in something more useful and interesting than credit default swaps. No wonder they are so proud (see the bold-faced paragraph below.)

Monday, May 14, 2012

The following excerpt is from an article by industrial historian Merritt Roe Smith, “New England Industry and the Federal Government,” in Engines of Enterprise: An Economic History of New England, edited by Peter Temin, Harvard University Press, 2000. Smith is also author of a number of classic studies of the machine tool industry.

Smith argues that "there were moments during the nineteenth century when government action made an enormous difference to the development of the market economy," and traces the development of the metal working machine tool industry to prove his point.

Ellen Brown is a huge favorite of mine. This is a woman who is a natural researcher who somehow stumbled onto the utterly fascinating history of monetary policy. As someone who grew up with these debates, I can she how she got hooked.

I have not seen her speak in person so I am especially grateful that one of her speeches got posted to YouTube. It isn't especially well-done (she keeps referring to her powerpoint slides but we don't get to see them) but these are important topics. From the perspective of this blog, I believe there is literally NO way we can build the expensive infrastructure necessary for a sustainable society and still maintain the incredibly parasitic current system of central banking.

The great economic war grinds on. It's a pretty one-sided war because the banksters have all the heavy ammunition on their side including government "legitimacy" and its monopoly on violence and crowd-control methods. And yet the citizens find ways of fighting back. Mostly its just lashing out in desperation but if given even the slightest chance, they show up at the polls to punish the political parties that have sold their souls to the banksters if there is any chance to do so.

And so it was that yesterday in supposedly "prosperous" Germany, the voters in the state of North Rhine-Westphalia dealt their austerity champion Ms. Merkel a staggering defeat. This only a week after her closest ally, Sarkozy of France, lost to a mild-mannered technician who promised merely to take another look at their austerity pledges.

The moneychangers also took the opportunity last week to show that they are even more evil than anyone could ever imagine. A trader from a bank named after the guy who literally flew the Jolly Roger from the masthead of his yacht, one J.P. Morgan, was exposed as having cost the institution at LEAST $2 billion stemming from exotic trades in derivatives. Of course, J.P. Morgan Chase being a "respectable" too-big-to-fail bank, wholly expects the long-suffering peasants to cover its losses.

No one knows what will happen next—including me. But the levels of rage are rising and at some point, governments may start to topple.

Sunday, May 13, 2012

On Friday, I had an anti-wind troll show up to jerk everyone's chain with his "wisdom" about the futility of wind power. To call his remarks moronic would be an insult to real morons. He actually compared working wind turbines to the stone heads on Easter Island suggesting that both were useless monuments to the egos of fools.

I am not suggesting that folks who disagree with me are automatically wrong, so I attempted to debate the troll. Of course, I forgot, these clowns only exist to piss you off so of course, he didn't respond to my points. After several tries, I just deleted the whole mess.

Now I want to encourage comments and some around here are remarkably well written. So I do not want to shut off comments—something I can do by simply clicking a box. On the other hand, I work VERY hard on this blog and I do NOT want it trashed up with the comments of fools. I addition, I have a weak heart so I can only tolerate so much annoying behavior.

I would like to explain why this particular troll enraged me so much.

This is obviously a pro wind-power blog. The first thing you see at the top of the page is a picture of a blade from a wind turbine. Coming here as an anti-wind troll shows about as much class as telling homophobic jokes at an obviously gay blog.

I have been a wind enthusiast since I was old enough to successfully fly kites. I have learned to be an accomplished sailor. But more importantly, I spent part of my youth in northwestern North Dakota where the wind blows constantly. The wind is so ever-present, it has been known to drive people crazy. Wind is such an obvious natural resource, it's hard not to speculate on doing something useful with it while you listen to it howl. So I have been thinking about these problems for almost 50 years.

In my life, I have been involved in the production of many complex and difficult things—and have enjoyed the experience. But the downside is that over time, one grows impatient with the worldviews of those who could not build a birdhouse with a gun to their heads. Converting a society built to run on premium fossil fuels to one running on wind is such a complex project, it literally makes shivers run up my spine. It is a project so difficult, a 50-year learning curve is likely. Wind power is NOT a hippie endeavor. There is a reason why people who create don't allow the unwashed to see their work until it's done. The only thing worse than the condescending "Well, it will probably look good when you're finished" is the ignorant "Doesn't look like it's going to work." Unfortunately, it's hard to keep a project like wind power under wraps until its done so the absurd comments from the useless protoplasm is guaranteed.

There are VERY few alternatives to wind. Fossil fuels face both supply and waste sink problems. Nuclear power—Fukushima. So the only question is, "Can we do wind well?" NOT "will we do wind at all!"

Blogs like mine face a delicate balancing act between "casting your bread upon the water" and "do not cast your pearls before swine lest they turn on you." Well a swine turned on me so I am afraid that in the interests of my seriously weakened heart, I am going to have to apply some strict rules about comments.

Any comments that are trollish in nature will be deleted as soon as I see them. I will have the final word on these matters.

Anyone who trolls more than once will be banned from this blog—and there is no appeals process.

If this doesn't solve the problem, I'll just turn off the comments.

This is a blog written in the interests of the Producer Classes. I will turn 63 this summer. I have been around Producers my whole life and so I can detect the manifestations of a real builder in parts per billion. If you wish to be welcome in this community, you will exhibit the characteristics of a problem-solver. I do not have the time or energy to debate mere problem-presenters and I utterly detest folks who think they have accomplished something by becoming a mere critic. I am a huge fan of the composer Sibelius who once said, "I pay no attention to critics—after all, no one ever built a monument to a critic." So the rule around here is, "If you want to criticize something—make sure you also offer at least ONE proposed solution for the problem you present."

Friday, May 11, 2012

In 2009, Pixar studios released an impossibly sweet animated 3D movie called "Up." And while animated movies are usually marketed to kids, this one also held great appeal for old coots who have reached the "you kids get off my lawn" stage in life. I am a little worried by how much I liked the movie and the old coot.

At one point in the movie, our heroes find themselves being pursued by a pack of vicious and well-trained attack dogs. The only thing that saves them is their discovery that the dogs can be easily distracted by simply shouting the word "Squirrel." It turns out, humans are almost as easily distracted by the word "sex." And so it was that while the USA was discovering that Latin America has almost totally abandoned them diplomatically at the Summit of the Americas in Cartagena Columbia, the USA press needed a distraction. So naturally they shout "sex" and sure enough, everyone (at least official Washington) got distracted.

When Jimmy Carter claimed that the country's energy problems should be considered the the Moral Equivalent Of War, his critics howled with scorn. His phrase was quickly reduced to MEOW. The resulting laughter soon drove his concerns from the discussions of the "serious" people in Washington—and his solar panels from the roof of the White House. Unfortunately for the world, Jimmy's MEOW was one of the few things he got absolutely right.

The need to find ways to power our civilization without resorting to fire has only grown more obvious every day since then. We cannot find nearly enough oil and other fossil fuels to supply the needs and wants of the 7+ billion inhabitants of the world and even if we could, there are no sinks large enough to contain the wastes so much fire will bring. We are lucky that humanity has discovered ways to generate electrical power without resorting to fire or the situation would be hopeless. Even so, a conversion to these methods is difficult and still pretty expensive. But because there really is no alternative to finding working substitutes for fire, it really doesn't matter that the problems are difficult or spendy—they MUST be solved.

The technical problems of conversion are difficult enough. But unfortunately, there are those who believe it is their best interests to make finding solutions more difficult—hopefully impossible. Some of these creatures are driven by ignorance and fear. But as the following article suggests, a lot of them are motivated by naked greed. The firestarters have an amazingly profitable racket going on—one they do not want threatened in any way. And so "think tanks" have been hired to sabotage the efforts of those attempting to solve perhaps humanity's most important dilemma.

What a waste! And by simply delaying solutions, the forces of ignorance and regression have probably baked a calamity into humanity's future. Because Jimmeh was right—the need to find solutions is extremely urgent. If the greedheads trying to sabotage solar and wind power are successful, they will easily rank as the most destructive and evil people in history.

Thursday, May 10, 2012

There's this incredible scene in Apollo 13 where it dawns on the stressed-out crew that the folks on the ground have NOT figured out how to power-up the frozen capsule they are going to need to re-enter earth's atmosphere. And while the crews on the ground have been working round the clock to create the start-up sequence, the guys in space are right—they don't have it figured out.

I feel a little the same way about the #OWS movement this spring. Yes it is hard to get the band back together after time off. Yes, the cops have probably infiltrated every meeting with more than five participants to disrupt and suggest the preposterous. But #OWS cannot seem to come up with what to do next because it suffers from some structural problems. They obviously have NOT figured it out.

Petitioning a bunch of arrogant and powerful private banksters is a quite different problem that petitioning one's own government—so the tactics of the 60s won't be of much help. The "revolutionary" ideas from the Marxist left won't help much because Marx barely wrote about the problems of lending and monetary policy. And the history of the movements against the money centers such as the Greenback Party, the Peoples Party, etc has been buried under such a steaming pile of horseshit over the years that it takes years of digging to find the relevant nuggets of truth.

Fortunately, there are literally billions of people who want #OWS and its sister movements to succeed and thrive. One such person is Michael Lewis—a man who has been observing the follies of Wall Street for a very long time. Listen up kids—the man knows what he is talking about.

Austerity sounds vaguely virtuous. The idea is to stop spending money on things we cannot afford. And after at least a century of rampant conspicuous waste, I can think of all sorts of fat targets ripe for elimination. Things like the multi-trillion dollar bailout of the most corrupt banks in recorded history.

Unfortunately for the rest of us, the Predator Classes have things in mind like eliminating free education for poor students when they think of austerity. And in their naked greed, they have managed to provoke near revolutionary conditions in places like Greece—and rapidly spreading to the rest of Europe.

Wednesday, May 9, 2012

This piece from the Daily Mail is utterly fascinating. Normally, the Brits and the French are barely on speaking terms—a situation that dates (at least) back to the days when the French helped USA escape the colonial clutches of the Brits. The Channel is wide indeed. The two nations have very different economic traditions—the French believe the Brits do economics about as disastrously as they cook, make wine, or make love. Their term for the way the Brits think about economics is "the Anglo Disease." In case you are confused by what is meant by "the Anglo Disease," a quick trip to the newsstand for the latest copy of The Economist will have you up to speed on the diseased thinking called neoliberalism in no time.

The Icelanders have been experimenting in democracy since they founded their Althing in 930 AD. Not surprisingly, they have gotten pretty good at it. So when their bankers morphed into banksters, they actually had a plan for bringing their criminal class back under social control. They are the only country in Europe or North America to have accomplished this. It is quite amazing what can be accomplished when the idea of democracy is taken seriously. It is even MORE amazing when a society can tell the difference between bankers and banksters.

Tuesday, May 8, 2012

Getting rid of nukes has been the dream of many. Actually doing it is very difficult once they have been fully integrated into the infrastructure. Germany announced that it will phase out their nukes over the next few years and that decision is costly and controversial. Japan has just shut hers down. Considering the catastrophe that is Fukushima, the decision can be easily explained. Even so, we are talking about 54 reactors! The Japanese have proven themselves to be extraordinarily resilient over the years but this is a very big deal and the costs are enormous. We shall see how they cope.

For many years now, I have speculated on the nature of "the Talk." Since the beginning of the rule of the banksters in say 1980, there has been this astonishing disconnect between what a politician says to get elected and what he or she actually proposes for governance. I just have to assume that somewhere between election night and the inauguration, the big boys come in and explain reality in a meeting I now just call "the Talk."

I was still naive enough to be shocked in 1992 when I realized that Bill Clinton had no intention whatsoever of making good on the promises he made when his campaign was guided by the slogan "it's the economy, stupid!" James Carvelle, the man who supposedly came up with that slogan was so astonished by the naked power of the banksters he soon was quoted as saying, "When I come back, I want to come back as the bond market."

But nothing even comes close to "the Talk" that must have been delivered to Nelson Mandela. As he was about to take office, he was obviously informed that whatever promises he had made to his supporters who had literally risked their lives opposing Apartheid, he was instead to use the resources of his government to pay off the debts of those who had kept him in prison for years. And so the man who stood up against Apartheid and the brutal South African police caved to a bunch of bond-holders. He probably wants to come back as the bond market too.

So now we see that François Hollande is being subjected to a version of "the Talk." This time it is in public—there is nothing back-room about it. I find it especially amusing that even though the hammer will come down on him if he tries to introduce his economic ideas, he will be allowed to introduce legislation that expands gay rights. I also love this essay because it explains what the heck the Europeans are up to when they trash "populism." This has long confused me because I know so much about the historical Populists and have been driven to protest the misuse of the term. The Euros are claiming that populism is bad because it is a precursor to fascism. In historical terms, they are utterly wrong but at least I now know what they are talking about.

Monday, May 7, 2012

Just remember, all this austerity grinding through the governments of the West is the idea of the moneychangers. First, they got everyone hopelessly in debt and now they are trying to collect. And since most of their collection efforts are aimed at folks who are beyond any real possibility of wealth extraction, they scramble to get it from governments. And so these governments are supposed to shut down their real reasons for existence and spend all their time and energy collecting on bills they did not incur. They call this social injustice "austerity" as if it were something good like going on a diet after Christmas feasting.

Well, democracy may be pretty meaningless these days but once in a while there is an opening and the rage against these crooked austerity measures comes roaring through. This what the U.N. / ILO is saying.

I feel like my grandfather must have felt when he realized that instead of the reforms he and his political party had championed (the Farmer-Labor Party of Minnesota—which basically ran Minnesota during the Great Depression) he was going to have to settle for the Keynesianism of Franklin Roosevelt. Just remember, the folks who championed monetary reform like the Greenback and People's Parties were not interested in trusting a banker / speculator like Keynes. Keynes hovered somewhere over the far right end of their political agenda. I mean, besides being a banker, he was a Brit who suggested it was a good idea to get democratically elected governments more deeply in debt to his class of people. For the farmers in the internal empire, this was reversing the American Revolution through the back door.

Like my grandfather, I am not easily convinced that an Eastern college professor with a soapbox at the New York Times has my interests at heart. This is especially true of Krugman because he was a "known" conservative for the early part of his career—even going so far as to take money from the utterly corrupt Enron. So this is a guy who once won a big award for being the most promising conservative in the land who is now telling us that he has seen the light as a Keynesian. And yet for all my snorting, we must keep track of Krugman because it is VERY likely that he is as good as we can expect for a long time. If this interview is any indication, it MIGHT be good enough. Might.

These days he is pushing a book called End This Depression Now!Since the folks who ended the Great Depression were heavily influenced by Keynes, so is this book. And as someone who was educated by the Keynesians, I find his thoughts to be authentic and historically accurate.

Sunday, May 6, 2012

One of the most-read posts here at real economics has been my review of "Inside Job" the Oscar-winning documentary about the financial disaster of 2008. Just today, I noticed the whole movie can be seen in its entirety on Vimeo in High Def. So without further ado, here it is.

1000 suicides a year doesn't sound like an especially large number until it is remembered that Ireland isn't a big country (only 4.8 million in the Republic of Ireland) and that it is still dominated by Roman Catholicism—a version of Christianity that makes a huge deal out of the idea that suicide is especially evil. Because the economy of Ireland is so grim, it can be assumed that a large majority of these suicides are driven by economic desperation.

Because these victims are giving up rather than taking their desperation to the streets, we must assume that for the neoliberals, a rising suicide rate is a feature, not a bug, of their economic schemes.

Saturday, May 5, 2012

For all its flaws and virtues, Populism can best be defined as the Producer Classes trying to do politics. Because politics has historically been a Predator Class activity, Producers are new to a game the other guys have been playing for centuries. Not surprisingly, they screw up once in a while.

The main focus of Producers has historically been on the Predators who make their lives miserable. Banking and money have always been at or near the top of any Producer's list of villains but especially now when it is so abundantly clear that the baddest villains on the planet are the moneychangers.

Which leads us to today's story of Gerry Adams. This is one of the people the Brits had to negotiate with during the "troubles" in Northern Ireland. I am pretty sure that any Brit who drinks his tea with his pinky extended considers him a terrorist. Adams is NOT a Producer. Yet Adams has discovered he wants to be associated with them so now he is going to be a Populist.

Keep in mind that when the "educated" classes toss around the word "populism" they usually mean something terribly icky that they don't like at all. This is hardly surprising since the whole point of most expensive educations is to learn the rituals of the Leisure / Predator Classes. The Populists themselves understood this. They are the ones who claimed that Elitism was the opposite of Populism. It wasn't that the Populist / Producers disdained skills and learning, they disdained the "educations" that transformed criminals into social "elites." THAT'S the elitism Populists despise.

Back to Adams. What he has apparently discovered is that Populism was all about confronting evil banksters. The fact that the People's Party invented perhaps the most potent political strategies in history is merely a plus—a plus he has used to restore his political relevance. The potential of Populist politics is why folks who have absolutely no interest in promoting the interest of Populists / Producers will enthusiastically use their tactics. But as doubtful as I am about a guy who used to blow things up ever really understanding historical Populism, he is actually closer than most European politicians. He apparently understands Populism is a left political position and that the People's Party descriptions of the Money Trusts barely need updating 120 years after the Omaha convention of 1892.

Friday, May 4, 2012

This story is beyond fascinating. For years (centuries) the big privately-run central banks like the Bank of England have existed to advance the financial positions of their member institutions. From the outside, it has looked like a gentleman's club where folks go to divide the spoils. So long as everyone played along, everyone got very rich. Not surprisingly, folks went along.

So here we see a story of how Governor King of the Bank of England is so frustrated at the actions of some members who threaten to upset all their cozy arrangements, he has gone to the government to get some more enforcement power. Draw your own conclusions, but what this story says to me is that:

There are now member institutions that have become SO greedy, they are willing to trash perhaps the greatest scam in history.

Some members have probably become so hooked on non-traditional activities like derivatives trading, they literally cannot stay open as a real bank.

There exists the very real possibility that the central banking model is breaking down from within. After centuries of unsuccessfully trying to control the world's privately-held central banks from the outside, stupid naked greed on the inside threatens to weaken these destructive monoliths in ways the followers of Ron Paul can barely imagine.

The political and economic issues that had #OWS in the streets last fall have not gone away. The unemployed young people didn't get jobs over the winter. If anything, conditions are worse. So now we get to see if the protestors came up with a real set of demands. I happen to agree that there are issues worth taking to the streets over. I would be happier if I had some idea that the protestors actually understood what they are.

Thursday, May 3, 2012

Apparently the threats from the international banksters over Argentina's announced nationalization of YPF, their oil company that had been sold off to Spain's Repsol in a privatization scam, did NOT convince a lot of Argentines. 207-32 is a pretty lopsided vote.

These are some classic Producer Class stories. It is difficult enough to come up with high-performance batteries that really work. (Or in the case of Lithium, simply making batteries that don't catch fire.) It is a world of highly exotic elements that often come from politically unstable parts of the world. This alone would make the prices volatile. But what is worse, whenever there are real economic reasons for price instability, the speculators will come along to extract their pound of flesh and make things 100 times worse. It's hard to make production decisions that include materials whose availability and prices are unknown.

So far, these rare earth bottlenecks haven't been especially critical because we mostly use lithium-ion batteries to power video cameras and laptop computers. But now people are actually thinking about using batteries to power cars. This move would turn tiny resource problems into ginormous ones.

Wednesday, May 2, 2012

Of all the insane things that are happening because a decision as been made to pump the world's available cash reserves into the banks instead of the real economy, the slowdown in a conversion to renewable energy ranks very near the top. And then there are the knuckle-draggers from ALEC to help destroy what are the pitiful remnants of the the solar industry in USA.

Tuesday, May 1, 2012

Some of the more criminal of the "privatizations" are being reversed. Most of these assets sales were first performed in small countries with the IMF's gun to the heads of state. The most recent big renationalization was in Argentina. Now it is happening in Bolivia. The fury against the perpetrators of these reversals in the clubs of the international moneychangers must be rocking the rooms. On the other hand, you can almost hear the citizens cheering for Kirchner and Morales all the way to North America.

There is no better way to wage war on workers than by destroying their jobs. So on this May Day 2012, let's take a moment to remember all those who have had their lives destroyed through the actions of the greedy and incompetent.